Electric cars will be seen as cheaper than petrol models within a decade

A Renault Twizy electric car on display at the Geneva International Motor Show in March.
A Renault Twizy electric car on display at the Geneva International Motor Show in March. PHOTO: AFP

LONDON (BLOOMBERG) - Battery-powered cars will soon be cheaper to buy than conventional petrol ones, offering immediate savings to drivers, new research shows.

Automakers from Renault to Tesla have long touted the cheaper fuel and running costs of electric cars that helps to displace the higher upfront prices that drivers pay when they buy the zero-emission vehicles.

Now, research from Bloomberg New Energy Finance indicates that falling battery costs will mean electric vehicles (EVs) will also be cheaper to buy in the US and Europe as soon as 2025. Batteries currently account for about half the cost of EVs, and their prices will fall by about 77 per cent between 2016 and 2030, the London-based researcher said.

"On an upfront basis, these things will start to get cheaper and people will start to adopt them more as price parity gets closer," said Mr Colin McKerracher, analyst at the London-based researcher. "After that, it gets even more compelling."

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Renault, maker of the Zoe electric car, predicts that by the early 2020s, total ownership costs of EVs will equal conventional internal combustion engine vehicles (known in the trade as ICE), according to Mr Gilles Normand, the French company's senior vice-president for electric vehicles.

"We have two curves," Mr Normand said in an interview earlier this month in London. "One is EV technology cost reductions because there are more breakthroughs in the cost of technology and more volume, so the cost of EVs will go down. ICE going to go up as a result of more stringent regulations, especially regarding to particulate regulations."